IoT Blooms in San Francisco

SAN FRANCISCO — Less than an hour's drive north from Silicon Valley and a short walk from San Francisco's financial district, a new high-tech community is being born. Call it IoT Town.

The area spanning parts of the city's South of Market and Potrero Hill neighborhoods is home to more than a dozen startups, three incubators, several angel investors, and three well attended monthly gatherings all devoted to hardware for the Internet of Things.

The startups here are building a wide range of automotive, consumer, and industrial IoT gear. Their projects include everything from smartwatches and fitness devices to intelligent coffee makers, drones, baby and dog monitors, and a hamburger-making robot to automate the McDonald's of the future.

There's little to no silicon being developed in IoT Town. The work focuses on low-cost nodes and gateways that use off-the-shelf chips designed for smartphones and tablets.

A handful of refugees from the Web 2.0 software boom helped get things started. They are attracting other angel investors flush with money from the likes of companies such as Facebook, Google, LinkedIn and others.

"In past six months the growth has been unbelievable," says Jim Reich, an engineer and denizen of IoT Town with his own stealth IoT startup called SensingElements. Hardware, IoT, and sensor "meetups" in the area "sell out in minutes with hundreds of spaces sold -- you can hardly hear yourself, there are so many people."

The IoT events are "a great way to meet people. Everyone is there to meet and recruit people and share experiences -- it's pretty helpful," said Caroline Fernandes, a business development manager for Keen IO, an IoT analytics startup based in Heavybit Industries, a nearby software startup incubator

Jim Reich and Caroline Fernandes work in separate IoT startups in the SoMA/Potrero Hill area.

Angel investors, the leading source of funds for local startups, often attend the events. Big corporations show up, too.

"I see General Motors quite a bit at these nowadays," said Reich. "San Francisco is taking a lead for this stuff more than the Valley."

Reich and Fernandes (husband and wife) live in the area where their neighbors include well known IoT startups such as Fitbit and Basis -- the smartwatch company Intel acquired recently. Crowdfunding source Indiegogo is headquartered just a few blocks away.

Up-and-coming startups in the area include drone maker Skycatch, Whistle (often called Fitbit for dogs), and Automatic, which makes a device that connects a user's car and phone to deliver driving tips. Incubators in the neighborhood include Highway1, Lemnos Labs, WearableWorld, and HeavyBit.

"This didn't exist five or six years ago, it was a very different scene," said Fernandes who worked with Reich at Streetline, an early IoT startup that got its start here well before the current boom.

"It was hard to get investment in hardware startups then, and San Francisco didn't accommodate small companies well," said Reich. "We were on the worst corner of the worst block -- it was us, a bunch of non-profits. and a bunch of people high on various things staggering around the streets."

Fast-forward a few years and things have changed, in part thanks to the culture of the Maker movement which encourages small teams and rapid prototyping. Reich also credits what he calls "the dividends from the cellular wars."

Today, he says, he can buy "an accelerometer for a buck and change, and for a few bucks more it might have an ARM Cortex M3 on it. The semiconductor investment is taken care of... and that's great for hardware startups that want to build the next connected humidifier or pollution sensor or something connected to your car."

In this neighborhood, it seems just about everybody does.

San Francisco's South of Market and Potrero Hill neighborhoods are becoming a hub for IoT hardware startups.

Great article, Rick. There's a lot of energy in the IoT community in San Francisco right now. SoMA, Civic Center and Potrero Hill have a high-concentration of IoT start-ups not only because of the incubators. Internet of Things sits at the intersection of design, engineering, data science and entreprenurship. Those 3 neighbourhoods in San Francisco are accessible for people in South Bay, East Bay as well as the city. They attract talents in all 4 groups. The incubators have given them convenient places to meet and work together.

With so many hardware suppliers, fabricators and manufacturers in the South Bay, any comment on why these startups have sprung up in San Fran? Hasn't this slowed them down? I know of at least one bright South Bay EE that refuses to travel the distance because of the inconvince of doing hardware in the city.

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